Australian tourists drive increased growth in hospitality

Australian tourists drive increased growth in hospitality sector
Auckland, 7 November, 2016

The spending momentum continued in October through the Paymark electronic payments network, with the hospitality sector at the forefront of growth.

Accommodation merchants saw 21.4% more spending, year on year, for the month of October and merchants providing food and beverage services experienced 14.1% growth. This continues a trend of double-digit annual growth rates since 2013.

A large contributor to this growth is the spending of international tourists, with the largest contribution coming from Australian visitors.

In the September quarter figures spending by holders of Australian credit cards in the three months amounted to $193 million, or around 1.4% of all spending through the Paymark network during that period. At the margin, the effect is greater as the $16 million spending growth since the September 2015 quarter represents 2.2% of all underlying spending growth in New Zealand.

The marginal effect is significantly higher again within the hospitality sector and within the tourist regions. Australian credit card spending amongst hospitality merchants increased 26% between the 2015 and 2016 September quarters, with the growth rate highest in Southland (+43%) and lowest in Wanganui (-4%). This contributed 19% of the spending growth through Paymark amongst Otago hospitality merchants, and 13% and 9% of hospitality spending growth in Southland and West Coast respectively. Not included in these figures is the extra spending created, in turn, by those within the hospitality sector.

The extra direct Australian spending made a strong contribution to the above-average total spending growth rate during the quarter in Otago and Southland. In West Coast, it provided an offset to otherwise weak spending from
other sources.

That tourism spending is already strong and has continued into October bodes well for a busy summer season. It adds to other forces that saw merchants experience a strong start to the Christmas spending spree. October marks the first month of the spending lead-up to Christmas, spending typically topping that of any earlier month in the current year. This again proved the case in October 2016. Furthermore underlying spending increased a seasonally adjusted 0.7% between September and October.

Compared to last year, underlying spending was up 5.1%, a growth rate dampened by the extra Sunday in October this year. The growth rate was highest in Bay of Plenty, Hawke’s Bay, Wellington and Wairarapa and lowest in Nelson and Gisborne.

Other than the strong hospitality sector, housing-related merchants also experienced good growth at 6.6% on last year while spending amongst fuel retailers dropped 5.7%.

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